SA’s big banks pull out of funding new coal projects: report

Three of South Africa’s biggest commercial banks have reportedly pulled out of funding new coal power projects.

This is according to energy expert Chris Yelland, who has been reporting on the status of these projects – namely, the Thabametsi and Khanyisa independent power producer (IPP) projects – over the past few weeks.

Yellend on Monday reported that FirstRand is the latest bank to pull out of funding new coal projects, with the group saying it has withdrawn funding from the Thabametsi project.

In January, Nedbank pulled out of funding the projects in favour of greener energy sources, while Standard Bank pulled out of the projects in September 2018, in line with the Organisation for Economic Co-operation and Development (OECD) new protocols.

The Thabametsi and Khanyisa projects were announced as the successful bidders the Department of Energy’s new-coal IPP programme in December 2016.

The former would add 557 MW to the national grid, while the latter would add 306 MW. Both projects are part of the Department of Energy’s Integrated Resource Plan for Electricity (IRP) published in August 2018.

Shift away from coal

While the national government is cognisant of South Africa’s dependence on coal powered energy, there has been a significant shift away from the fossil fuel to focus on renewable and clean energy sources.

The 2018 IRP shows diminishing dependence on coal energy through to 2050, where it is expected for coal to contribute only 10% of the total energy budget.

While focus was previously put on nuclear energy as a viable future energy source – a position championed by former president Jacob Zuma’s administration – the current political will appears to be in support of wind, solar and gas energy.

The IRP looks at a three scenarios between now and 2050 and how the energy make-up in the country could look based on low, medium and high economic growth.

In all scenarios, the role of coal, gas and nuclear power diminishes, and renewable energy sources balloon.

Between 2021 and 2030, all growth scenarios effectively track the same, with coal power reducing, and gas and renewable power increasing. With high growth, hydroelectric power accelerates. Coal power is expected to contribute 60% of the energy budget during this time.

In the period between 2031 and 2040, new capacity continues to be dominated by renewable energy – though provision is made to commission additional nuclear capacity of around 5600 MW. Here, coal power is expected to contribute 30% of the energy budget.

Between 2041 and 2050, renewable energy is projected to be the dominant suppliers of energy in South Africa, with the country’s sole nuclear plant, Koeberg, assumed to be decommissioned during that period. By 2050, coal is expected to account for under 10% of the energy budget, with renewables and gas accounting for 80% of produced energy.

Read: ANC drops Zuma’s nuclear plans – and embraces renewable energy instead

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SA’s big banks pull out of funding new coal projects: report